Wednesday, May 12, 2010

Galileo Blogs blogs

Blogger Galileo Blogs has put up a couple nice pieces recently. The first is a blog post on how government regulation of the finance industry is tantamount to attacking the "brains" of capitalism. The second is a lengthy comment he left regarding the mechanisms by which free markets regulate themselves given the rights necessary to do so. From the latter:
The second mistaken premise is actually a failure to recognize a very important context. That context is laissez-faire, specifically a society where all property is privately owned. This includes all the roads and even bodies of water. That means that when someone transports dynamite, for example, it is not just his judgment that is applicable. It is the judgment of all relevant members of the manufacturer of dynamite, the transportation company, and the user of the dynamite. Importantly, it is also the judgment of the owners of the means of transportation, whether that includes roads, rails, ships, or planes. They set the terms for those who can use their facilities, and that means standards of safety. Moreover, it includes the *insurance companies* of all these entities who will set terms of behavior if they are to insure all of these parties. In that regard, which of these parties would be willing to transport something as dangerous as dynamite without insurance liability protection? And to be provide such risky coverage, imagine what strict terms for the safe handling of that dynamite that will be required by the insurance company.


Blogger Galileo Blogs said...

Thank you for citing my blog post and comment. I liked the comment, too, so I am glad it got new life here. I also like the next paragraph after the one you quoted. It is a different way to think about "regulation," and illustrates how a world without governmental regulation, would still be quite "regulated." The advocates of governmental regulation are always counting on the generally unstated premise that if there were no governmental regulations, it would be a chaotic, dog-eat-dog, anything goes laissez faire. How far from the truth!

Here's that next paragraph:

"The fact that the voluntary agreement of so many self-interested parties is required to successfully transport that dynamite means that every aspect of its shipment will, in fact, be regulated. It will be extremely tightly regulated. It will be regulated *privately* by the voluntary agreement and supervision of all these people."

1:49 PM  

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